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Labour proposals for tax treatment of carried interest

Looking to make a change

Key points

  • Carried interest is the share of super profit managers of successful private investment funds often receive.
  • Carried interest returns currently typically attract a lower rate of tax than salary and traditional performance bonuses.
  • The current Conservative government appears to seek to maintain the status quo regarding the taxation of carried interest.
  • The Labour party has pledged to significantly increase the tax-take from carried interest and there are a number of potential routes to achieving this.
  • If a material shift in the way the UK taxes carried interest is on the cards care should be taken to ensure that legislative changes are well designed and the UK’s world-leading investment management private capital and wider financial and professional services ecosystem is not materially damaged.

With the possibility of the Labour party forming the government at the next UK general election there appears to be an ever-greater prospect...

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